IMF Chief Says U.S. Needs Blend of Spending Cuts, Revenue Raising

The United States needs a
balanced, comprehensive approach to tackle its fiscal woes that
should include a mix of spending cuts and revenue increases, the
head of the International Monetary Fund said on Sunday.

(Corrects name of CNN show in second paragraph)

WASHINGTON, Dec 8 The United States needs a
balanced, comprehensive approach to tackle its fiscal woes that
should include a mix of spending cuts and revenue increases, the
head of the International Monetary Fund said on Sunday.

"My view, personally, is that the best way to go forward is
to have a balanced approach that takes into account both
increasing the revenue, which means, you know, either raising
taxes or creating new sources of revenue, and cutting spending,"
IMF Managing Director Christine Lagarde said in a pre-taped
interview on CNN's "State of the Union," which aired on Sunday.

Lagarde discussed her views about Washington's impending
"fiscal cliff," a combination of automatic spending cuts and tax
increases that will simultaneously take effect in early 2013 if
lawmakers cannot arrive at a deal.

President Barack Obama's administration and congressional
leaders are still trying to negotiate a way to avoid the cliff
of $600 billion in tax hikes and federal spending. Failure to do
so could likely tip the U.S. economy back into a recession.

In her interview on CNN, Lagarde cited the fiscal cliff as
the biggest threat to the U.S. economy, saying America is more
vulnerable to its own domestic troubles than to anything else
happening in the Eurozone or China.

The U.S. economy "is less vulnerable to what happens
outside, for instance in Europe," Lagarde said.

"I'm not saying that there will be no consequences out of a
crisis that could happen in Europe. But the consequences would
be relatively minor."

"It is more exposed to its own difficulties and to its own
issues than to what happens elsewhere in the world, because it
is such a large player."

She told CNN she remains optimistic that lawmakers will come
up with a plan before the fiscal cliff deadline.

"My confidence is deeply rooted in the affection that I have
for the United States," she said. "I believe that there is a
sense of being practical, addressing the issues rather than, you
know, dancing around and avoiding issues."

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